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Fruendly Auto Source, Inc. v. Chrostowski

Court of Appeals of Missouri, Eastern District, Second Division

March 28, 2017

FRUENDLY AUTO SOURCE, INC., Plaintiff,
v.
WALTER CHROSTOWSKI, ET AL., Appellants,
v.
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, Respondent.

         Appeal from the Circuit Court of Lincoln County Cause No. 12L6-CC00164 Honorable David H. Ash

          OPINION

          Colleen Dolan, Judge

         I. Introduction

         Walter Chrostowski and WJC Trucking, LLC ("Appellants") appeal the motion court's grant of Certain Underwriters at Lloyd's of London's ("Respondent") motion for summary judgment finding there was no coverage under the Liability Policy (the "Policy") issued to Appellants by Respondent.[1] Appellants argue the motion court erred by finding the written long term lease agreement between Appellants and a motor carrier, USXL Worldwide ("USXL"), was not in effect at the time of Mr. Chrostowski's accident because it had been mutually terminated by the actions of Mr. Chrostowski and USXL. We affirm.

         II. Factual and Procedural Background

         On September 16, 2011, while driving his semi-truck home without an attached trailer, Mr. Chrostowski crashed into a used car dealership owned by Fruendly Auto Source, Inc. ("Plaintiff") causing damage to fourteen used cars of Plaintiff.[2] Plaintiff filed a petition against Appellants for damages. Mr. Chrostowski submitted an insurance claim to Respondent, which was denied for failure to meet a condition for coverage. The policy in question was referred to by the parties as a "Bobtail" liability policy (the "Policy").[3] This Policy states that Respondent is not responsible for providing coverage under the Policy unless Mr. Chrostowski is "operating under a presently effective, written long term lease with a motor carrier providing primary liability coverage." The Policy goes on to state that "[i]f no written long term lease exists and is effective, no coverage applies."

         On March 1, 2010, Appellants entered into a written "Model Lease Agreement" (the "Lease Agreement") with USXL which provided that WJC Trucking would haul freight for USXL in return for compensation. The Lease Agreement further stated USXL would provide "all required insurance covering personal injury and property damage, and cargo loss and damage, as is required of a motor carrier engaged in interstate commerce by federal law[.]" Upon signing the Lease Agreement, USXL gave Mr. Chrostowski equipment including a qualcomm for on-the- road communication with dispatch concerning load assignments, a load lock for safely securing loads, state and federal permits, license plates, a cab-card showing he had auto liability insurance, and a pre-pass/EZ Pass Device.

         The Lease Agreement provided that upon lease cancellation, the equipment provided by USXL had to be returned. Prior to September 16, 2011, Mr. Chrostowski informed USXL that he would be leaving and terminating the Lease Agreement. In anticipation of this event, Mr. Chrostowski and USXL arranged for him to bring his truck in and for USXL mechanics to remove the qualcomm device. On September 16, 2011, Mr. Chrostowski drove to the USXL truck yard located in St. Charles, Missouri, so that his qualcomm could be removed from his semi-truck. While it was being removed, Mr. Chrostowski said goodbye to the USXL employees and told USXL he was quitting. Following this device's removal, Mr. Chrostowski delivered his final load for USXL to Illinois. On his return trip to his home in Excello, Missouri, Mr. Chrostowski again stopped at the USXL yard in St. Charles and dropped off the trailer, final paperwork, and the remaining equipment in his possession belonging to USXL (license plates, permits, and cab cards) at approximately 9:00 p.m. When Mr. Chrostowski left the USXL yard he was driving his semi-truck without an attached trailer, or "bobtailing." It was on his way home that Mr. Chrostowski had the accident. After taking a drink of coffee, he began choking and blacked out, leaving the road and crashing into the Plaintiff's used car lot at approximately 10:20 p.m.

         Subsequently, Mr. Chrostowski called Commercial Truck Claims Management ("CTCM"), which was designated under the Policy to act as an adjuster in the event of an accident, to make a claim on his Policy. In that phone call, Mr. Chrostowski stated he had delivered his load for the evening and when he returned to the USXL yard he "broke [his] lease at about 8:45 at night." In a second recorded phone call with CTCM, Mr. Chrostowski denied that he was taking a weekend or a week off stating, "No, actually I was done. I was coming home. My truck was going in the shop to get it paint[ed] on Monday…and I was going to go lease one with another company." In a sworn statement, given on June 28, 2012, Mr. Chrostowski stated that "I just was going to lease a truck out of somewhere else, and I came in at night and pulled my plates. And on the night of the 16th, [I] pulled my plates and put my plates and my permit both and the rest of their paperwork in a mailbox."

         Aaron Ormsby, USXL's designated representative, testified that contracts between USXL and truck-drivers are more commonly terminated without written notice. He stated when there is no written notice, USXL and the contractor believe a contract is terminated when a contractor returns all of their equipment. This is because a truck driver is no longer authorized to haul a load for USXL anywhere without their license plates. He testified: "It's illegal to drive without those things and be leased to anybody…once we have all those things, they're not legally able to drive for us. And if they're not legally able to drive, then we don't have a lease with them." Mr. Ormsby further stated that USXL considered the lease with Appellants to be terminated at approximately 9:00 p.m., on September 16, 2011, when Mr. Chrostowski turned in USXL's plates and cab card.

         Respondent denied the claim on September 23, 2011, for failure to meet a condition for coverage-namely because Mr. Chrostowski was not operating under a presently effective "long term lease with a motor carrier providing primary liability coverage" at the time of his accident. Plaintiff filed its petition against Appellants on December 7, 2012, and Appellants filed a third-party petition against Respondent on May 10, 2013, to determine whether there was coverage for the accident under the Policy. Upon Respondent's motion, this third-party petition was severed from Plaintiff's claim against Appellants. Appellants and Respondent then filed cross-motions for summary judgment to determine coverage. On July 16, 2015, the motion court denied Appellants' motion for summary judgment and granted Respondent's, finding the lease was not effective between Appellants and USXL at the time of the accident because the parties' conduct made it impossible for Appellants to legally drive for USXL. In its judgment, the motion court found that "while it may be argued that the lease exists because it was not terminated in writing, it cannot be argued that it was effective because by their mutual actions the parties made it impossible for [Mr. Chrostowski] to legally drive for USXL."

         Appellants appealed the motion court's decision to this Court on August 19, 2015, and we dismissed finding that we did not have jurisdiction because there was no final, appealable judgment. On June 17, 2016, the court determined that the summary judgment only applied to the third-party claim and there was no just reason for delay in granting that order and judgment in accordance with Rule 74.01(b).[4] Appellants filed a second notice of appeal on July 19, 2016, which was also denied because this Court questioned whether certification was proper, since the claim for insurance coverage would be moot if Plaintiff lost its claim against Appellants. On December 16, 2016, Plaintiff obtained a judgment in its favor against Appellants. This appeal follows.

         III. Standard of Review

         A trial court's decision to grant summary judgment is an issue of law, which this Court reviews de novo; we will affirm such a decision if it is proper under any legal theory supported by the record. Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010). Summary judgment is proper when a movant demonstrates the right to judgment based on material facts for which there is no genuine dispute. Brentwood Glass Co. v. Pal's Glass Serv., 499 S.W.3d 296, 300 (Mo. banc 2016); see also Rule 74.04(c)(6). Appellate courts view evidence in the record "in the light most favorable to the party against whom judgment was entered" affording them all reasonable inferences. Brentwood, 499 S.W.3d at 300. As ...


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